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Should Companies Cancel Incentive Travel During a Recession?
March 02, 2009
By Anne Thornley-Brown
Whenever there is an economic downturn, many companies cut incentive travel and other non-cash incentives. This is short-sighted. When times are tough, it’s much more difficult for your team members to "make their numbers," and you'll need to have strong incentives to motivate your team and reward top performers.
If your company is performing well, there is no better time to schedule an incentive trip than during a recession. Even six- and seven-star resorts are now offering special rates. And these bargains will disappear when the economy picks up.
Incentive Travel Pays for Itself
Incentive travel is particularly effective because it pays for itself. How? Incentives are given at the end of the quarter or year AFTER successful results have been produced. For incentives to be effective, careful planning is needed.
At the beginning of your fiscal year:
• Set your target—the minimal level of financial performance both in terms of profits and earnings per share
• Identify the level of sales that each member of your business development team needs to reach for your organization to meet its target
Individuals should qualify for the incentive based on two criteria:
• The company's level of performance
• The individual's level of performance
Why Companies Cut Incentive Travel
So if incentive trips pay for themselves, why do companies tend to eliminate them when the going gets tough? The answer to that question is complex, but part of what is going on right now is the "AIG Effect."
Some of the companies that received bailout money in 2008 have still organized luxury junkets and lavish corporate events. They seem to have forgotten that incentive trips and luxury corporate events are rewards for EXCEPTIONAL performance, not an entitlement to be bestowed when there is failure of epic proportions. We've all read the headlines about AIG, Bank of America, Wells Fargo and Morgan Stanley.
The poor judgment of some organizations and the risk of negative publicity is now making even organizations that are doing well nervous about spending ANY money for incentives. This is throwing the baby out with the bath water.
When You've Earned Your Reward
When your company or members of your team beat the odds and produce outstanding results through sheer hard work and determination, they deserve to be rewarded. However, make the rewards proportional to individual and company performance. One-size does not fit all, and it should not have to.
For example, if some members of your team have gone above and beyond the call and your company is still struggling, by all means reward them. However, this is not the time for gambling junkets or stays at lavish resorts. Keep it simple. Maybe a dinner at a really nice restaurant for the team members and their spouses will have to suffice for this year. Then, take a portion of the money you would have spent for an expensive incentive and invest in consultants and business facilitators with a proven record that can help you get your company back on track.
If your company is doing well, don't be afraid to pull out all the stops. Go ahead and reward employees who have gone the extra mile and produced exceptional results. Show appreciation for your best customers. This will encourage them to do even more next year. The key is to ensure that you are also doing your share in terms of giving back to the community and contributing to local charities.
You can set up a simple matrix to determine the non-cash incentives and corresponding dollar value of the incentive to which each member of your team will be entitled.
Your PR department should also ensure that the word gets out about your company’s outstanding performance and the success strategies that produced results. Heaven knows, we could all use some encouraging news.
Incentive Travel: A Triple Win
Incentive travel and events such as awards galas can be viewed as a triple win. The company wins because a motivated team produces higher results. The individual sales professionals win as they reap the rewards of their efforts and receive recognition from their peers. The economy also wins. A local banquet will provide work for:
• Event planners
• Restaurants, caterers or banquet halls
• Transportation companies
• Grocers
• Hairdressers and barbers
• Entertainers
• Musicians
• AV companies
Overseas incentive trips will also produce work for:
• Airlines
• Travel agents
• Pharmacies
• Luggage stores and manufacturers
• Airport stores
• Hotels and resorts
• Dry cleaners
• Uniform supply companies
• Florists
• Tour operators
• Local attractions
…and so on…and so on.
If your company is doing well, don't be afraid to splurge. After all, you and your team have worked hard and earned it and you will be helping the economy.
Anne Thornley-Brown is the President of Executive Oasis International (www.executiveoasis.com), a Toronto based consulting firm that regularly organizes incentive travel, executive retreats and corporate events in Dubai, Abu Dhabi, Oman, Jamaica, Malaysia, Singapore and Canada. They provide one stop shopping service with a personalized approach to incentive travel for corporate groups. Customized itineraries include travel, transfers, hotel, business facilitation, tours, excursions, business team building simulations and luxury corporate events.
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